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Armed with $9 million in new funding, mobile-payments startup LevelUp plans to use the capital infusion to expand its sales force and build out new solutions to improve the merchant experience.
Boston-based LevelUp is launching a remote sales team that will sign and service merchants outside the company’s 10 primary markets. Merchants in LevelUp’s primary markets are signed and serviced by the company’s local sales team.
The remote sales team will handle inbound merchant inquiries and perform outbound marketing from the company’s headquarters in Boston. New merchants signed by the remote sales team will receive a LevelUp terminal by mail and will be walked through installation by phone.
“There are a lot of merchants in cities around the country where LevelUp does not have a sales, marketing, and implementation team that want to offer LevelUp to their customers and the remote sales team is how we will service them,” says John Valentine, vice president of local sales. “We have a backlog of about 500 merchants outside our 10 primary markets requesting to launch LevelUp.”
Adding sales representatives that market to and service merchants in non-primary markets by phone can dramatically ramp up LevelUp’s national expansion plans, industry experts say.
“A telesales team can be very effective signing merchants with a highly compelling offering, because the high volume of sales calls that can be made for a low price,” says Todd Ablowitz, president of Double Diamond Group LLC, a Centennial, Colo.-based consulting firm. “The potential downside is that with little or no face-to-face interaction with merchants, it can be hard to gain merchants’ loyalty, which can lead to higher attrition.”
The new financing follows a $12 million funding round LevelUp received in June. That same month, the fledgling company made news by elliminating its 2% transaction fee, replacing it with a flat 35-cent fee on each dollar of incremental sales its application generates for merchants.
Since June, LevelUp has expanded into two new primary markets, Los Angeles and Washington D.C., and increased its merchant base from 3,000 to 3,500. The company has 200,000 active users, a figure that has doubled the past three months.
In addition to expanding its sales force, LevelUp is working to integrate its software with merchant point-of-sale systems. Doing so will streamline the payment process for merchants by making it easier to reconcile the transaction in their POS system after the consumer scans the quick-response (QR) code linked to their LevelUp account. Currently, merchants need to record transaction data into their POS system, such as a cup of coffee purchased for $1, for each LevelUp transaction. Integrating LevelUp to merchant POS systems will remove that step.
“By integrating to the merchant’s POS system, we make it easier for merchants and consumers to accept LevelUp,” says Valentine.
Consumers make a LevelUp purchase by opening the app on their mobile phone and scanning the QR code linked to their credit card at the LeveUp card reader. At that time, any rewards such as a merchant discount, are redeemed automatically.
While the integration to merchant POS systems can potentially open new doors to how consumers receive and redeem LevelUp rewards, such as automatically giving the customer half off a donut with a coffee purchase, for example, achieving compatibility with all POS software providers is a formidable task, observers say.
“Getting access to the POS companies can be difficult because they will ask what\'s in it for them,” says Ablowitz.
Recent research by The Logo Company, a Brooklyn, N.Y.-based supplier of business logos, says 53% of Americans have never used a QR code, and that the majority of the 2,047 people interviewed find them pointless. But Valentine counters that LevelUp users see value to linking their credit cards to a QR code to make purchases and earn and redeem rewards.
“Unlike a QR code on a billboard or in a print ad that the consumer has no idea of what kind of landing page it will take them to when scanned, the intended use of our code is clear, which defines its value,” he says.
If and when NFC-enabled phones containing mobile wallets become mainstream, Valentine says LevelUp can quickly adjust its platform to accommodate NFC technology.
Adds Ablowitz: “Until NFC takes over as a more effective solution for some applications, QR codes will keep growing.”
